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12295 Emal[ 0 Economics — The Micro Economy Today - Schiller, Gebhardt.14e. Supply and Demand cupboard BasK Text Styles [Cl Sequoya @ Tallahassee Com... - + -' Searcnicmta )3 v explain most market nativity. Specialization and Exchange
We are drivento buy and sell goods and services in the market by two simplefacts. CHAPT 1. Most of us are inmpable of producing everything we want to mnsurne.
1. Even i; we could produce all our own goods and servloes, R would still make sense to specialize,
producing onty one product andtmdirig it for other desired goods and services.
Dur economic interactions with others are thus necessrla1ed by two constraints: 1. Our absolute inah ty as individuals to produce all the things we need or desire.
2. The limited amount at time, energy, and resources we have for producing those things we could
make for ourselves.
Together these constraints lead us to specialize and interact. Mast of the interactions that result take
place in the market. Intematinna! Trade, Tw nations will end up consuming more products than they could it they had to
produce everything themselves. That's why global markets are so vital to economic prosperity. C: Fadots of production
supplied B The Two Markets
The easiest my in keep track ofall this activity is to distinguish two basil: market. 1. In factol markets, factors of production are exchanged. Market partlo'pants buy or sell land, labor,
or capital that can he used in the production process. 2. In Product markets, consumers go to the grocery store to buy desired goods and servims that is,
to buy products. In this context, consumers again interact with business ﬁrms, thistime
purchasing goods and servioes those ﬁrms have produced. {Foreigners also participate in the
product market by supplying goods and services (imports) to the United States and buying some
of our output (exports). (— 47 /510 a >> ‘9 A A E 0 Type here to search ...
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